Which of the Following Costs Is Relevant in a Decision-Making

question 67

Multiple Choice

Which of the following costs is relevant in a decision-making process?

• A) prepaid insurance costs
• B) historical costs
• C) sunk costs
• D) variable costs

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Definitions:

Raw Materials Inventory

Items and supplies that are used in the production process of goods, held in storage awaiting to be processed.

Standard Cost Variances

The differences between the actual costs incurred and the standard costs, analyzed to assess performance in various areas such as materials, labor, and overhead.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor directly used to create the good.

Direct Labor Costs

Expenses associated with the wages and benefits of employees who directly work on the production of goods.